MacKenzie Company sold $180 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 4% service charge for sales on its credit cards. MacKenzie electronically remits the credit card sales receipts to the credit card company and receives payment immediately. The journal entry to record this sale transaction would be:

Question

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The actual amount received by MacKenzie Company after deducting the 4% service charge is $172.80 ($180 - ($180 x 0.04)). Therefore, the debit entry should be made for Cash of $172.80. The $7.20 difference between the sales amount and the amount received is the Credit Card Expense for that sale, which should be debited. Finally, the credit entry should be made for Sales of $180. Therefore, the correct journal entry is: Debit Cash $172.80; debit Credit Card Expense $7.20 and credit Sales $180.

MacKenzie Company Sold $180 of Merchandise to a Customer Who